Sequoia Capital recently took down an article that it had put up on September 22, titled, “Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too”. Since then, Sam Bankman-Fried’s crypto trading platform, FTX, has filed for bankruptcy, amidst allegations of fraud. His fall from grace is a reminder of how quickly the media is quick to paint the wealthy as maverick geniuses, rather than asking deep questions about their sources of wealth. It is also a story about how the venture capital system is broken, with billions of dollars worth of capital raised for projects that are nothing more than grand narratives without any actual substance. What made Bankman-Fried so appealing to the media, and venture capitalists, was that he cloaked his business activities with the flag of philanthropy. We have already seen how billionaires who promise to give away their fortunes are eulogized, despite those billionaires never actually getting around to do it, or suffering any real economic pain. Their “sacrifices” are front page news, while those of ordinary people are just life. The rich have found yet another way to increase their appeal to Americans, and it may prove to be a net loss for society.
Sequoia’spiece on the man affectionately known as “SBF”, is indicative, not just of howsociety views the rich who buy gold and silver, but of how the rich view themselves. Anyone who has read Elon Musk’s texts realizes that the very rich are not only egotistical, they are surrounded by people eager to tell them just how brilliant they are. The Sequoia piece breathlessly describes FTX’ potential as“a companythat may very well end up creating the dominant all-in-one financial super-appof the future rivaling metaverse crypto.. Nothing is a sure bet in crypto, but just the possibility that FTX could join—or even eclipse—the big four of American banking (JPMorgan Chase, Bank of America, Wells Fargo and Citibank) means it’s already valued at $32 billion”. Remember, this piece was written in September. Sequoia was one of SBF’s investors and far from conducting any extensive due diligence, seems to have brought into his narrative. Years after We Work and Theranos, the industry once again proves that it is happy to grant wealth, not to the best and brightest, but to those who can spin the biggest tale. Journalists bought into the narrative, with some referring to him as “the next Warren Buffett”, based on a career that was less than 2 years old.
Bankman-Fried was lauded for his pursuit of effective altruism. This is a philosophy popular among Silicon Valley types, who believe that reason and evidence should be used to discover and pursue the greatest good. Sounds good enough. As William MacAskill, an important philosopher within the movement explained to Bankman-Fried, the evidence says that the greatest good is achieved when a person makes a lot of money so they can give it all away. taken to its logical conclusion, the wealthy are potentially the best people in the world, and anything is justified in the pursuit of wealth, because, hey, I am going to give it all away. Of course, it’s very difficult to find anyone who has actually given away a significant chunk of their fortune, within their lifetimes, but anyway, effective altruism. The halo of Bankman-Fried’s philanthropic assertions did not just make Sequoia weak at the knees. Even in the wake of FTX’ collapse, the New York Times wrote an article that seems to absolve him of any real failings. The New York Times cannot seem to bring itself to see a man who lost his investors assets worth $10 billion and counting, lied to his investors, used customer funds to make investment bets to enrich himself, manipulated financial statements, and hid details from his colleagues, as being a bad person, because he was an effective altruist. FTX was not just a crypto trading platform, it was designed to extract wealth from ignorant traders to enrich Bankman-Fried, his investors and allies.
Whereas Sequoia suggested that “the success of FTX seems like a foregone conclusion”, led by a “genius”, and wondered if Bankman-Fried would be “the world’s first trillionaire”, the reality has proven to be much worse. Bankman-Fried is yet more proof of how the rich and the media overestimate the merits of the rich.